##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 AMENDMENT NO. 1
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended: June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-02517
 TOREADOR RESOURCES CORPORATION
  Delaware
    
    75-0991164(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer Identification Number)
 4809 Cole Avenue, Suite 108
Dallas, Texas 75205
 Registrants telephone number, including area code: (214) 559-3933
 o þ
  o þ o
 o þ




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##### 



TOREADOR RESOURCES CORPORATION
 TABLE OF CONTENTS
 PageExplanatory
Note about this Report
    
    
    1PART I. FINANCIAL INFORMATIONItem 1.
Financial Statements (unaudited)(1)Consolidated Balance Sheets  June 30, 2006 and December 31, 2005
    
    
    2Consolidated Statements of Operations  for the three months ended
June 30, 2006 and 2005
    
    
    3Consolidated Statements of Operations  for the six months ended
June 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows  for the six months ended
June 30, 2006 and 2005
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    18Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    31SIGNATURES
    
    
    33Rule 13a-14(a) Certification of Chief Executive OfficerRule 13a-14(a) Certification of Chief Financial OfficerRule 13a-14(a) Certification of Chief Accounting OfficerSection 1350 Certification
  
 (1)
    
    As described in Note 1, the financial statements for 2005 and
2006 have been restated.




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands,
except share data and per share)  (Unaudited)
 June 30,
    
    
    December 31,2006
    
    
    2005(restated)
    
    

(restated)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    51,246
    
    
    $
    53,113Short-term
investments
    
    
    
    
    
    
    40,000Accounts and notes receivable
    
    
    5,531
    
    
    
    8,162Income taxes receivable
    
    
    5,099
    
    
    
    4,453Other
    
    
    2,974
    
    
    
    6,537Total current assets
    
    
    64,850
    
    
    
    112,265Oil and gas properties, net, using successful efforts
method of accounting
    
    
    189,991
    
    
    
    138,158Advances to and investments in unconsolidated entities
    
    
    2,508
    
    
    
    2,251Goodwill
    
    
    4,233
    
    
    
    4,195Other assets
    
    
    5,587
    
    
    
    4,945$
    267,169
    
    
    $
    261,814LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    27,093
    
    
    $
    19,248Convertible debenture  related party
    
    
    
    
    
    
    810Income taxes payable
    
    
    1,492
    
    
    
    908Total current liabilities
    
    
    28,585
    
    
    
    20,966Long-term accrued liabilities
    
    
    1,064
    
    
    
    1,410Long-term debt
    
    
    
    
    
    
    5,000Long-term
asset retirement obligations
    
    
    3,947
    
    
    
    3,630Deferred
income tax liabilities
    
    
    11,732
    
    
    
    12,199Convertible senior notes
    
    
    86,250
    
    
    
    86,250Total liabilities
    
    
    131,578
    
    
    
    129,455Commitments
and contingenciesStockholders equity:Preferred stock, Series A-1, $1.00 par value,
4,000,000 shares authorized; liquidation
preference of $1,800; 72,000 shares issued and
outstanding
    
    
    72
    
    
    
    72Common stock, $0.15625 par value, 30,000,000
shares authorized;16,647,761 and 16,142,824
shares issued and outstanding
    
    
    2,601
    
    
    
    2,522Additional paid-in capital
    
    
    109,122
    
    
    
    108,001Retained earnings
    
    
    34,782
    
    
    
    29,564Accumulated other comprehensive loss
    
    
    (8,452
    )
    
    
    (3,364
    )Deferred
compensation
    
    
    
    
    
    
    (1,902
    )Treasury stock, at cost, 721,027 shares
    
    
    (2,534
    )
    
    
    (2,534
    )Total stockholders equity
    
    
    135,591
    
    
    
    132,359$
    267,169
    
    
    $
    261,814
  2




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
  Three Months Ended June 30,2006
    
    
    2005(restated)
    
    
    (restated)Oil and natural gas sales
    
    $
    10,303
    
    
    $
    7,164Operating costs and expenses:Lease operating
    
    
    2,653
    
    
    
    2,140Exploration expense
    
    
    1,185
    
    
    
    431Depreciation, depletion and amortization
    
    
    1,287
    
    
    
    950General and administrative
    
    
    2,377
    
    
    
    1,955Total operating costs and expenses
    
    
    7,502
    
    
    
    5,476Operating income
    
    
    2,801
    
    
    
    1,688Other income (expense):Equity in earnings of unconsolidated investments
    
    
    96
    
    
    
    35Gain on sale of properties and other assets
    
    
    180
    
    
    
    12Foreign currency exchange loss
    
    
    (1,137
    )
    
    
    (53
    )Interest
income and
expense and other, net
    
    
    617
    
    
    
    89Total other income (expense), net
    
    
    (244
    )
    
    
    83Income before taxes
    
    
    2,557
    
    
    
    1,771Income tax provision (benefit)
    
    
    984
    
    
    
    (185
    )Income from continuing operations
    
    
    1,573
    
    
    
    1,956Income from discontinued operations, net of tax
    
    
    
    
    
    
    1Net income
    
    
    1,573
    
    
    
    1,957Preferred dividends
    
    
    (41
    )
    
    
    (40
    )Income
available to common shares
    
    $
    1,532
    
    
    $
    1,917Basic income
available to common shares per share
    
    $
    0.10
    
    
    $
    0.14Diluted
income available to common shares per share
    
    $
    0.09
    
    
    $
    0.13Weighted average shares outstanding:Basic
    
    
    15,492
    
    
    
    14,172Diluted
    
    
    16,598
    
    
    
    15,601
  3




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
  Six Months Ended June 30,2006
    
    
    2005(restated)
    
    
    (restated)Revenue:Oil and natural gas sales
    
    $
    20,072
    
    
    $
    13,840Operating costs and expenses:Lease operating
    
    
    5,088
    
    
    
    4,260Exploration expense
    
    
    2,238
    
    
    
    805Depreciation, depletion and amortization
    
    
    2,589
    
    
    
    1,933General and administrative
    
    
    4,885
    
    
    
    3,759Total operating costs and expenses
    
    
    14,800
    
    
    
    10,757Operating income
    
    
    5,272
    
    
    
    3,083Other income (expense):Equity in earnings of unconsolidated investments
    
    
    192
    
    
    
    124Gain on sale of properties and other assets
    
    
    651
    
    
    
    12Foreign currency exchange loss
    
    
    (873
    )
    
    
    (40
    )Interest
income and expense and other, net
    
    
    1,266
    
    
    
    579Total other income, net
    
    
    1,236
    
    
    
    675Income before taxes
    
    
    6,508
    
    
    
    3,758Income tax provision (benefit)
    
    
    1,787
    
    
    
    (123
    )Income from continuing operations
    
    
    4,721
    
    
    
    3,881Income from discontinued operations, net of tax
    
    
    
    
    
    
    11Net income
    
    
    4,721
    
    
    
    3,892Preferred dividends
    
    
    (82
    )
    
    
    (603
    )Income
available to common shares
    
    $
    4,639
    
    
    $
    3,289Basic income
available to common shares per share
    
    $
    0.30
    
    
    $
    0.24Diluted
income available to common shares per share
    
    $
    0.28
    
    
    $
    0.23Weighted average shares outstanding:Basic
    
    
    15,413
    
    
    
    13,490Diluted
    
    
    16,634
    
    
    
    14,789
  4




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
  Six Months Ended June 30,2006
    
    
    2005(restated)
    
    
    (restated)Cash flows from operating activities:Net income
    
    $
    4,721
    
    
    $
    3,892Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,579
    
    
    
    1,933Dry holes and abandonments
    
    
    92
    
    
    
    126Gain on sale of properties
    
    
    (651
    )
    
    
    (12
    )Deferred income taxes
    
    
    (467
    )
    
    
    4,229Equity in earnings of unconsolidated investments
    
    
    (192
    )
    
    
    (124
    )Stock based compensation
    
    
    1,138
    
    
    
    77Realized losses on foreign currency transactions
    
    
    873
    
    
    
    40Change in operating assets and liabilities:(Increase) decrease in accounts and notes receivables
    
    
    2,631
    
    
    
    (397
    )Increase in income taxes receivable
    
    
    (646
    )
    
    
    (3,768
    )(Increase) decrease in other current assets
    
    
    2,829
    
    
    
    (1,899
    )Increase in accounts payable and accrued liabilities
    
    
    7,499
    
    
    
    882Increase (decrease) in income taxes payable
    
    
    584
    
    
    
    357Net cash provided by operating activities
    
    
    20,990
    
    
    
    5,336Cash flows from investing activities:Expenditures for property and equipment
    
    
    (55,350
    )
    
    
    (23,359
    )Short-term
investments
    
    
    40,000
    
    
    
    Proceeds from the sale of properties and equipment
    
    
    1,549
    
    
    
    28Net cash
paid for
acquisitions
    
    
    
    
    
    
    (8,751
    )Investment in unconsolidated subsidiaries
    
    
    (65
    )
    
    
    (510
    )Net cash used in investing activities
    
    
    (13,866
    )
    
    
    (32,592
    )Cash flows from financing activities:Borrowings from long-term debt
    
    
    
    
    
    
    1,963Repayments of long-term debt
    
    
    (5,000
    )
    
    
    (2,000
    )Proceeds
from issuance of common stock
    
    
    
    
    
    
    32,872Payment of preferred dividends
    
    
    (82
    )
    
    
    (105
    )Tax benefit
of stock options exercised
    
    
    1,210
    
    
    
    Exercise of
stock options
    
    
    969
    
    
    
    1,823Net cash provided by (used in) financing activities
    
    
    (2,903
    )
    
    
    34,553Net increase in cash and cash equivalents
    
    
    4,221
    
    
    
    7,297Effects of foreign currency translation on cash and cash
equivalents
    
    
    (6,088
    )
    
    
    (2,468
    )Cash and cash equivalents, beginning of period
    
    
    53,113
    
    
    
    4,977Cash and cash equivalents, end of period
    
    $
    51,246
    
    
    $
    9,806
  5




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TOREADOR RESOURCES CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1  BASIS OF PRESENTATION
  Restatement
of Previously Issued Financial Statements
    Capitalization of Interest
 Capitalization of Interest Cost
 Insurance Claim Adjustments
  Foreign
Currency
 Foreign Currency
Translation
  Depletion,
Depreciation and Amortization (DD&A)
   6




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TOREADOR RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS  (in thousands, except per share data)  (UNAUDITED)
 June 30,
    
    
    December 31,2006
    
    
    2005As
    
    
    
    
    
    
    AsPreviously
    
    
    As
    
    
    Previously
    
    
    AsReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedASSETSCurrent assets
    
    $
    76,687
    
    
    $
    64,850
    
    
    $
    118,992
    
    
    $
    112,265Oil & Gas Properties, net using successful
    
    
    175,412
    
    
    
    189,991
    
    
    
    134,035
    
    
    
    138,158Advances to and investments in unconsolidated entities
    
    
    2,508
    
    
    
    2,508
    
    
    
    2,251
    
    
    
    2,251Goodwill
    
    
    2,487
    
    
    
    4,233
    
    
    
    2,487
    
    
    
    4,195Other Assets
    
    
    6,053
    
    
    
    5,587
    
    
    
    5,415
    
    
    
    4,945Total Assets
    
    $
    263,147
    
    
    $
    267,169
    
    
    $
    263,180
    
    
    $
    261,814LIABILITIES
AND STOCKHOLDERS EQUITYCurrent Liabilities
    
    $
    28,608
    
    
    $
    28,585
    
    
    $
    24,197
    
    
    $
    20,966Long-term liabilities
    
    
    100,024
    
    
    
    102,993
    
    
    
    104,739
    
    
    
    108,489Stockholders Equity:Preferred stock
    
    
    72
    
    
    
    72
    
    
    
    72
    
    
    
    72Common Stock
    
    
    2,601
    
    
    
    2,601
    
    
    
    2,522
    
    
    
    2,522Additional paid-in capital
    
    
    109,224
    
    
    
    109,122
    
    
    
    108,001
    
    
    
    108,001Retained
earnings
    
    
    36,842
    
    
    
    34,782
    
    
    
    31,346
    
    
    
    29,564Accumulated other comprehensive income (loss)
    
    
    (11,690
    )
    
    
    (8,452
    )
    
    
    (3,261
    )
    
    
    (3,364
    )Deferred
compensation
    
    
    
    
    
    
    
    
    
    
    (1,902
    )
    
    
    (1,902
    )Treasury stock, at cost
    
    
    (2,534
    )
    
    
    (2,534
    )
    
    
    (2,534
    )
    
    
    (2,534
    )Total Stockholders Equity
    
    
    134,515
    
    
    
    135,591
    
    
    
    134,244
    
    
    
    132,359Total liabilities and stockholders equity
    
    $
    263,147
    
    
    $
    267,169
    
    
    $
    263,180
    
    
    $
    261,814
 TOREADOR RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)  (UNAUDITED)
 Three Months Ended June 30,2006
    
    
    2005As
    
    
    
    
    
    
    AsPreviously
    
    
    As
    
    
    Previously
    
    
    AsReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedOil and natural gas sales
    
    $
    10,303
    
    
    $
    10,303
    
    
    $
    7,164
    
    
    $
    7,164Operating costs and expenses
    
    
    7,468
    
    
    
    7,502
    
    
    
    5,476
    
    
    
    5,476Operating Income
    
    
    2,835
    
    
    
    2,801
    
    
    
    1,688
    
    
    
    1,688Other Income (expense), net
    
    
    1,638
    
    
    
    (244
    )
    
    
    (9
    )
    
    
    83Income before taxes
    
    
    4,473
    
    
    
    2,557
    
    
    
    1,679
    
    
    
    1,771Income tax provision (benefit)
    
    
    1,884
    
    
    
    984
    
    
    
    (185
    )
    
    
    (185
    )Income from continuing operations
    
    
    2,589
    
    
    
    1,573
    
    
    
    1,864
    
    
    
    1,956Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net Income
    
    
    2,589
    
    
    
    1,573
    
    
    
    1,865
    
    
    
    1,957Preferred dividends
    
    
    (41
    )
    
    
    (41
    )
    
    
    (40
    )
    
    
    (40
    )Income
available to common shares
    
    $
    2,548
    
    
    $
    1,532
    
    
    $
    1,825
    
    
    $
    1,917Basic
income available to common shares per share fromContinuing operations
    
    
    0.16
    
    
    
    0.10
    
    
    
    0.13
    
    
    
    0.14Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.16
    
    
    $
    0.10
    
    
    $
    0.13
    
    
    $
    0.14Diluted income available to common shares per share fromContinuing operations
    
    
    0.15
    
    
    
    0.09
    
    
    
    0.12
    
    
    
    0.13Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.15
    
    
    $
    0.09
    
    
    $
    0.12
    
    
    $
    0.13Weighted average shares outstanding:Basic
    
    
    15,728
    
    
    
    15,492
    
    
    
    14,171
    
    
    
    14,172Diluted
    
    
    16,775
    
    
    
    16,598
    
    
    
    15,610
    
    
    
    15,601
 TOREADOR RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per share data)  (UNAUDITED)
 Six Months Ended June 30,2006
    
    
    2005As
    
    
    
    
    
    
    AsPreviously
    
    
    As
    
    
    Previously
    
    
    AsReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedOil and natural gas sales
    
    $
    20,072
    
    
    $
    20,072
    
    
    $
    13,578
    
    
    $
    13,840Operating costs and expenses
    
    
    14,947
    
    
    
    14,800
    
    
    
    10,691
    
    
    
    10,757Operating Income
    
    
    5,125
    
    
    
    5,272
    
    
    
    2,887
    
    
    
    3,083Other Income (expense), net
    
    
    3,140
    
    
    
    1,236
    
    
    
    407
    
    
    
    675Income before taxes
    
    
    8,265
    
    
    
    6,508
    
    
    
    3,294
    
    
    
    3,758Income tax provision (benefit)
    
    
    2,687
    
    
    
    1,787
    
    
    
    (123
    )
    
    
    (123
    )Income from continuing operations
    
    
    5,578
    
    
    
    4,721
    
    
    
    3,417
    
    
    
    3,881Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    11Net Income
    
    
    5,578
    
    
    
    4,721
    
    
    
    3,428
    
    
    
    3,892Preferred dividends
    
    
    (81
    )
    
    
    (82
    )
    
    
    (603
    )
    
    
    (603
    )Income available to common shares
    
    $
    5,497
    
    
    
    4,639
    
    
    $
    2,825
    
    
    
    3,289Basic
income available to common shares per shareContinuing operations
    
    
    0.35
    
    
    
    0.30
    
    
    
    0.21
    
    
    
    0.24Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.35
    
    
    
    0.30
    
    
    
    0.21
    
    
    
    0.24Diluted
income available to common shares per share fromContinuing operations
    
    
    0.33
    
    
    
    0.28
    
    
    
    0.20
    
    
    
    0.23Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.33
    
    
    
    0.28
    
    
    $
    0.20
    
    
    
    0.23Weighted average shares outstanding:Basic
    
    
    15,618
    
    
    
    15,413
    
    
    
    13,490
    
    
    
    13,490Diluted
    
    
    16,717
    
    
    
    16,634
    
    
    
    14,565
    
    
    
    14,789
  June 30,2006
    
    
    2005Net cash provided by (used in):Operating activities- As previously reported
    
    
    19,377
    
    
    
    4,268- As restated
    
    
    20,990
    
    
    
    5,336Investing activities- As previously reported
    
    
    (50,377
    )
    
    
    (34,286
    )- As restated
    
    
    (13,866
    )
    
    
    (32,592
    )Financing activities- As previously reported
    
    
    (4,112
    )
    
    
    34,038- As restated
    
    
    (2,903
    )
    
    
    34,553
 New Accounting Pronouncements
 Fair Value Measurement
   Accounting for Uncertainty in Income Taxes  An Interpretation of
FASB Statement No. 109,
  Accounting for Conditional Asset Retirement
Obligations, an interpretation of SFAS No. 143
 Exchanges of Nonmonetary Assets, an Amendment of
APB Opinion No. 29, Accounting for Nonmonetary Transactions ( SFAS 153)
 Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements
 Whether Mineral Rights Are Tangible or Intangible Assets, Business Combinations, Goodwill and Other Intangible Assets. Interaction of FASB Statements No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, and EITF Issue No. 04-2, Whether Mineral Rights Are Tangible
or Intangible Assets. Application of FASB Statement No. 142,
Goodwill and Other Intangible Assets, to Oil- and Gas-Producing Entities
 7




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##### Table of Contents



NOTE 2  INSURANCE CLAIM ON 2005 BLACK SEA INCIDENTS
  NOTE 3  STOCK-BASED COMPENSATION
   8




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2005(restated)
    
    (restated)Income applicable to common shares, as reported
    
    $
    1,917
    
    
    $
    3,289Basic
earnings available to common shares per share as reported
    
    
    0.14
    
    
    
    0.24Diluted earnings available to common shares per share reported
    
    
    0.13
    
    
    
    0.23Pro-forma stock-based compensation costs
under the fair value method, net of related
tax
    
    
    15
    
    
    
    41Pro-forma
income available to common
shares, as under the fair-value method
    
    
    1,902
    
    
    
    3,248Pro-forma
basic earnings available to common shares per share under
the fair-value method
    
    
    0.13
    
    
    
    0.24Pro-forma diluted earnings available to common shares per share under
the fair-value method
    
    
    0.13
    
    
    
    0.22
  Options granted in2005Dividend yield per share (1)
    
    
    Volatility (2)
    
    
    70.9%Risk-free interest rate (3)
    
    
    4.0%Expected lives (4)
    
    
    5 years
 
 (1)
    
    Historically, we have not paid dividends on common shares and do not anticipate doing
so during the expected lives of these options.(2)
    
    We estimated volatility based on historic rates of return on our common stock over
periods similar to the expected lives of the related options.(3)
    
    We estimated the risk free rate based on treasury issues with lives similar to the
expected lives of the related options based on quotes available at or near the dates of
grant of the related options.(4)
    
    We estimated expected lives considering, a) the contractual term of the related
options, b) the average age of options exercised near the date of grant of the related
options and c) our expectation of our stock performance during the contractual period.    9




---



##### Table of Contents



WEIGHTEDAVERAGE EXERCISESHARES
    
    PRICEOutstanding at January 1, 2006
    
    
    858,940
    
    
    $
    5.07Granted
    
    
    
    
    
    
    Exercised
    
    
    (173,070
    )
    
    
    (4.83
    )Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2006
    
    
    685,870
    
    
    $
    5.09Exercisable at June 30, 2006
    
    
    672,536
    
    
    $
    4.87
    10




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##### Table of Contents



Grant-DateShares
    
    Fair ValueNon-vested at January 1, 2006
    
    
    114,560
    
    
    $
    20.07Shares granted
    
    
    208,075
    
    
    
    29.12Shares vested
    
    
    (29,479
    )
    
    
    (16.90
    )Shares forfeited
    
    
    (300
    )
    
    
    (31.42
    )Non-vested at June 30, 2006
    
    
    292,856
    
    
    
    26.82
 11




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##### Table of Contents



NOTE 4  EARNINGS PER COMMON SHARE
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(restated)
    
    
    (restated)
    
    
    (restated)
    
    
    (restated)(in thousands, except per share data)Basic earnings per share:Numerator:Income from continuing operations, net of tax
    
    $
    1,573
    
    
    $
    1,956
    
    
    $
    4,721
    
    
    $
    3,881Income from discontinued operations, net of tax
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    11Net income
    
    
    1,573
    
    
    
    1,957
    
    
    
    4,721
    
    
    
    3,892Less: dividends on preferred shares
    
    
    41
    
    
    
    40
    
    
    
    82
    
    
    
    603Net income available to common shares
    
    $
    1,532
    
    
    $
    1,917
    
    
    $
    4,639
    
    
    $
    3,289Denominator:Common shares outstanding
    
    
    15,492
    
    
    
    14,172
    
    
    
    15,413
    
    
    
    13,490Income per share available to common shares
    
    $
    0.10
    
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.24Diluted earnings per share:Numerator:Income from continuing operations, net of tax
    
    $
    1,573
    
    
    $
    1,956
    
    
    $
    4,721
    
    
    $
    3,881Income from discontinued operations, net of tax
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    11Net income
    
    
    1,573
    
    
    
    1,957
    
    
    
    4,721
    
    
    
    3,892Plus: interest on convertible debt
    
    
    
    
    
    
    14
    
    
    
    6
    
    
    
    28Less: dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563Income available to common shares
    
    $
    1,573
    
    
    $
    1,971
    
    
    $
    4,727
    
    
    $
    3,357Denominator:Common shares outstanding
    
    
    15,492
    
    
    
    14,172
    
    
    
    15,413
    
    
    
    13,490Common stock options and warrants
    
    
    598
    
    
    
    759
    
    
    
    661
    
    
    
    854Conversion of preferred shares
    
    
    450
    
    
    
    450
    
    
    
    450
    
    
    
    225Conversion of 5.0% notes payable
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)Restricted stock
    
    
    58
    
    
    
    
    
    
    
    57
    
    
    
    Conversion of debenture
    
    
    
    
    
    
    220
    
    
    
    53
    
    
    
    220Diluted shares outstanding
    
    
    16,598
    
    
    
    15,601
    
    
    
    16,634
    
    
    
    14,789Income per share available to common shares
common shares
    
    $
    0.09
    
    
    $
    0.13
    
    
    $
    0.28
    
    
    $
    0.23
 
 (1)
    
    Conversion of these securities would result in issuance of 2,014,716 common shares that are antidulitive; therefore, there are no dilutive shares added at June 30, 2006. The 5% notes payable were issued September 27, 2005
and September 30, 2005. 12




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##### Table of Contents



(2)
    
    There were no restricted stock issuances for the three and
six months ended June 30, 2005. NOTE 5  COMPREHENSIVE LOSS
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(restated)
    
    
    (restated)
    
    
    (restated)
    
    
    (restated)Net income
    
    $
    1,573
    
    
    $
    1,957
    
    
    $
    4,721
    
    
    $
    3,892Foreign currency translation adjustment
    
    
    (4,963
    )
    
    
    (10,643
    )
    
    
    (5,088
    )
    
    
    (15,830
    )Comprehensive loss
    
    $
    (3,390
    )
    
    $
    (8,686
    )
    
    $
    (367
    )
    
    $
    (11,938
    )
 NOTE 6  LONG-TERM DEBT
  Convertible Senior Notes due October 1, 2025
   Revolving Line of Credit with Natexis Banques Populaires
  13




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##### Table of Contents



Revolving Line of Credit with Texas Capital Bank, N.A.
  Convertible Subordinated Notes
  Convertible Debenture
  Interest Payments
  NOTE 7  ASSET RETIREMENT OBLIGATIONS
  14




---



##### Table of Contents



2006
    
    
    2005Asset retirement obligation January 1
    
    $
    3,630
    
    
    $
    3,291Asset retirement accretion expense
    
    
    102
    
    
    
    69Property additions
    
    
    11
    
    
    
    274Foreign currency translation adjustment
    
    
    204
    
    
    
    (340
    )Asset retirement obligation at June 30
    
    $
    3,947
    
    
    $
    3,294
 NOTE 8  GEOGRAPHIC OPERATING SEGMENT INFORMATION
   Three Months Ended June 30, 2006(restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    1,863
    
    
    $
    7,441
    
    
    $
    999
    
    
    $
    
    
    
    $
    
    
    
    $
    10,303Costs and expenses
    
    
    2,608
    
    
    
    3,627
    
    
    
    545
    
    
    
    213
    
    
    
    509
    
    
    
    7,502Operating income (loss)
    
    $
    (745
    )
    
    $
    3,814
    
    
    $
    454
    
    
    $
    (213
    )
    
    $
    (509
    )
    
    $
    2,801
 Three Months Ended June 30, 2005(restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    1,744
    
    
    $
    4,745
    
    
    $
    675
    
    
    $
    
    
    
    $
    
    
    
    $
    7,164Costs and expenses
    
    
    2,706
    
    
    
    2,245
    
    
    
    512
    
    
    
    13
    
    
    
    
    
    
    
    5,476Operating income (loss)
    
    $
    (962
    )
    
    $
    2,500
    
    
    $
    163
    
    
    $
    (13
    )
    
    $
    
    
    
    $
    1,688
 Six Months Ended June 30, 2006(restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    3,493
    
    
    $
    14,730
    
    
    $
    1,849
    
    
    $
    
    
    
    $
    
    
    
    $
    20,072Costs and expenses
    
    
    5,801
    
    
    
    6,749
    
    
    
    1,106
    
    
    
    213
    
    
    
    931
    
    
    
    14,800Operating income (loss)
    
    $
    (2,308
    )
    
    $
    7,981
    
    
    $
    743
    
    
    $
    (213
    )
    
    $
    (931
    )
    
    $
    5,272
 Six Months Ended June 30, 2005(restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    3,527
    
    
    $
    9,036
    
    
    $
    1,277
    
    
    $
    
    
    
    $
    
    
    
    $
    13,840Costs and expenses
    
    
    5,078
    
    
    
    4,498
    
    
    
    1,165
    
    
    
    16
    
    
    
    
    
    
    
    10,757Operating income (loss)
    
    $
    (1,551
    )
    
    $
    4,538
    
    
    $
    112
    
    
    $
    (16
    )
    
    $
    
    
    
    $
    3,083
 15




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##### Table of Contents



Total Assets (1)(restated)UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalJune 30, 2006
    
    $
    52,233
    
    
    $
    81,217
    
    
    $
    107,332
    
    
    $
    13,624
    
    
    $
    12,763
    
    
    $
    267,169June 30, 2005
    
    $
    25,022
    
    
    $
    56,162
    
    
    $
    35,500
    
    
    $
    2,970
    
    
    $
    10,216
    
    
    $
    129,870
 
 (1)
    
    Total consolidated assets reflect the effect of intersegment eliminations. NOTE 9  INCOME TAXES
    Note
10  Subsequent Events
 Insurance
Claims
   Notice of Default
  16




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##### Table of Contents



New
Secured Revolving Facility
      Nasdaq
Violation
  17




---



##### Table of Contents



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS
  Restatement of Previously Issued Financial Statements
   EXECUTIVE OVERVIEW
  18




---



##### Table of Contents




    
    Operating income of $5.3 million, compared with $3.1 million for the six months ended
June 30, 2005,
    
    Production of 341 MBOE, compared with 303 MBOE for the six months ended June 30, 2005,
    
    Cash flows from operating activities of $21.0 million,
compared with $5.3 million for
the six months ended June 30, 2005.
 LIQUIDITY AND CAPITAL RESOURCES
     19




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##### Table of Contents



Liquidity
   Senior Debt
  20




---



##### Table of Contents



Convertible Senior Notes
  New
Secured Revolving Facility
     Preferred Stock
  Dividend and Interest Requirements
  21




---



##### Table of Contents



Private
Placement
  Contractual Obligations
  CRITICAL ACCOUNTING POLICIES
  Successful Efforts Method of Accounting
   22




---



##### Table of Contents



Reserve Estimates
  Impairment of Oil and Natural Gas Properties
  23




---



##### Table of Contents



Future Development and Abandonment Costs
   Income Taxes
   24




---



##### Table of Contents



RESULTS OF OPERATIONS
 COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
  For the Three Months Ended June 30,2006
    
    
    2005ProductionOil (MBbls):United States
    
    
    15
    
    
    
    16France
    
    
    112
    
    
    
    99Turkey
    
    
    17
    
    
    
    16Total
    
    
    144
    
    
    
    131Gas (MMcf):United States
    
    
    128
    
    
    
    135France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    128
    
    
    
    135MBOE:United States
    
    
    37
    
    
    
    39France
    
    
    112
    
    
    
    99Turkey
    
    
    17
    
    
    
    16Total
    
    
    166
    
    
    
    154Average PriceOil ($/Bbl):United States
    
    $
    64.09
    
    
    $
    48.80France
    
    
    66.39
    
    
    
    47.98Turkey
    
    
    57.32
    
    
    
    41.74Total
    
    $
    65.06
    
    
    $
    47.31Gas ($/Mcf):United States
    
    $
    6.67
    
    
    $
    6.69France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    $
    6.67
    
    
    $
    6.69$/BOE:United States
    
    $
    49.79
    
    
    $
    43.71France
    
    
    66.39
    
    
    
    47.98Turkey
    
    
    57.32
    
    
    
    41.74Total
    
    $
    61.84
    
    
    $
    46.26
 Revenue
 Oil and natural gas sales
    25




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##### Table of Contents



Costs and expenses
 Lease operating
  Exploration expense.
  Depreciation, depletion and amortization
  General and administrative
  Other income and expense
  Income available to common shares
  Other comprehensive income
 26




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##### Table of Contents



June 30, 2006
    
    
    June 30, 2005Euro
    
    $
    1.2713
    
    
    $
    1.2092New Turkish Lira
    
    $
    0.6332
    
    
    $
    0.7467Romania Lei
    
    $
    0.00004
    
    
    $
    0.00003Hungarian
Forint(1)
    
    $
    0.0050
 
 (1)
    
    There were no Hungarian operations during the three and six months ended June 30, 2005. COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
  For the Six Months Ended June 30,2006
    
    
    2005ProductionOil (MBbls):United States
    
    
    29
    
    
    
    30France
    
    
    237
    
    
    
    196Turkey
    
    
    34
    
    
    
    33Total
    
    
    300
    
    
    
    259Gas (MMcf):United States
    
    
    247
    
    
    
    260France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    247
    
    
    
    260MBOE:United States
    
    
    70
    
    
    
    74France
    
    
    237
    
    
    
    196Turkey
    
    
    34
    
    
    
    33Total
    
    
    341
    
    
    
    303Average PriceOil ($/Bbl):United States
    
    $
    61.49
    
    
    $
    47.90France
    
    
    62.08
    
    
    
    46.08Turkey
    
    
    54.55
    
    
    
    39.09Total
    
    $
    61.18
    
    
    $
    45.42Gas ($/Mcf):United States
    
    $
    6.35
    
    
    $
    6.44France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    $
    6.35
    
    
    $
    6.44$/BOE:United States
    
    $
    47.67
    
    
    $
    42.48France
    
    
    62.08
    
    
    
    46.08Turkey
    
    
    54.55
    
    
    
    39.09Total
    
    $
    58.39
    
    
    $
    44.45
 Revenue
 Oil and natural gas sales
  27




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##### Table of Contents



Costs and expenses
 Lease operating
  Exploration expense.
  Depreciation, depletion and amortization
  General and administrative
  Other income and expense
  28




---



##### Table of Contents



Net income available to common shares
  Other comprehensive income
   June 30, 2006
    
    
    June 30, 2005Euro
    
    $
    1.2713
    
    
    $
    1.2092New Turkish Lira
    
    $
    0.6332
    
    
    $
    0.7467Romania Lei
    
    $
    0.00004
    
    
    $
    0.00003Hungarian
Forint(1)
    
    $
    0.0050
 
 (1)
    
    There were no Hungarian operations during the three and six months ended June 30, 2005. 
 ITEM 4  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  29




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##### Table of Contents




    
    During the year-end audit several errors were found in spreadsheets. We believe that
the failure of the review process to detect the errors constituted a material weakness.
    
    During the audit of the statutory accounts of our French subsidiary, several audit
adjustments were recorded to the statutory accounts, which affected the tax basis of our
French oil and gas properties. During the preparation of our deferred tax provision, our
French staff failed to consider the statutory audit adjustments in determining the book 
tax basis difference, which resulted in an error in our deferred tax provision for France.
    
    Our review of the system of controls surrounding the information technology system
revealed that 1) several employees could prepare and post entries, leading to a segregation
of duties issue; 2) there was inadequate security over the proper storage of offsite
back-up tapes and the periodic review of back-up tapes to ensure their accuracy; 3)
security logs generated by the system were not periodically reviewed and terminated
employees were not disconnected from the system in a timely manner; and 4) several
authorized users of our accounting system had access to modules that create additional
segregation of duties issues.
  
    
    We did not maintain an effective control environment and our financial and accounting
organization was not adequate to support our financial reporting requirements. The
involvement of corporate personnel in the reporting of foreign transactions and operations
was not sufficient to accurately capture and record such activity and we did not maintain a
sufficient complement of personnel with an appropriate level of accounting knowledge,
experience and training in the application of generally accepted accounting principles
consistent with the level and complexity of our operations.
    
    Our accounting and financial reporting systems and procedures were not sufficiently
designed to ensure consistent or complete application of our accounting policies or to
prepare financial statements in accordance with generally accepted accounting principles.
This includes not only the sufficiency of our review of sensitive calculations,
reconciliations and spreadsheets but also the preparation and processing of financial
accounting information.
  
    
    During the year-end audit several errors were found in
spreadsheets. We believe that the failure of the review process to
detect the errors constituted a material weakness.
    
    Our review of the system of controls surrounding the
information technology system revealed that 1) several employees
could prepare and post entries, leading to a segregation of duties
issue; 2) there was inadequate security over the proper storage
of offsite back-up tapes and the periodic review of back-up tapes to
ensure their accuracy; 3) security logs generated by the system
were not periodically reviewed and terminated employees were not
disconnected from the system in a timely manner; and 4) several
authorized users of our accounting system had access to modules that
create additional segregation of duties issues.
  Changes in Internal Control over Financial Reporting
   30




---



##### Table of Contents




    
    Improving the computerized integrated financial reporting system. This will automate
the manual processes that are causing errors in spreadsheets.
    
    Hiring additional experienced accounting staff to allow for improved segregation of
duties and a more thorough review, by senior financial officers, of the financial
statements and underlying supporting documentation.
    
    Providing additional training to our accounting staff and acquiring
other accounting resources to improve our ability to report our financial statements in
accordance with generally accepted accounting principles.
    
    Formally documenting our accounting policies and procedures.
 
 PART II. OTHER INFORMATION
 
 ITEM 6  EXHIBITS
 ExhibitNumber
    
    Description
    
    Incorporation by Reference10.1
    
    Summary of Amendment to Restricted Stock Award
Agreement of Thomas P. Kellogg, dated April 6, 2006
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
April 12, 200610.2
    
    Amendment to Toreador Resources Corporation 2005
Long-Term Incentive Plan
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
May 12, 200610.3
    
    Summary Sheet: 2006 Non-Employee Director Equity
    
    Incorporated by reference from
 31




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Incorporation by ReferenceCompensation
    
    Exhibit 10.2 to the
Current Report on
Form 8-K filed on
May 12, 200610.4
    
    Form of 2006 Outside Director Restricted Stock Award
    
    Incorporated by
reference from
Exhibit 10.3 to the
Current Report on
Form 8-K filed on
May 12, 200610.5
    
    Michael Fitzgerald Employee Restricted Stock Award
Agreement dated May 30, 2006
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
June 5, 200610.6
    
    Ed Ramirez Employee Restricted Stock Award Agreement
dated May 30, 2006
    
    Incorporated by
reference from
Exhibit 10.2 to the
Current Report on
Form 8-K filed on
June 5, 200631.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer
    
    Filed Herewith31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer
    
    Filed Herewith31.3
    
    Rule 13a-14(a) Certification of Chief Accounting Officer
    
    Filed Herewith32.1
    
    Section 1350 Certification of Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer
    
    Filed Herewith
 32




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##### Table of Contents



TOREADOR RESOURCES CORPORATION,
RegistrantJanuary 14, 2007
    /s/ G. Thomas Graves IIIG. Thomas Graves IIIPresident and Chief Executive OfficerJanuary 14, 2007
    /s/ Douglas W. WeirDouglas W. WeirSenior Vice President and Chief Financial OfficerJanuary 14, 2007
    /s/ Charles J. CampiseCharles J. CampiseVice President  Accounting and Chief Accounting
Officer 33